ANN ARBOR, Mich.—The largest-scale test of whether lives could be saved by giving cars the ability to communicate with each other on the road got under way here Tuesday in a program that could steer the future of U.S. auto safety regulation.

For the next year, about 3,000 Ann Arbor residents will go about their daily driving in cars outfitted with electronic gear that tracks their vehicle’s location and the locations of other similarly-equipped vehicles.

If two vehicles appear to be on a collision course, alarms will chime—or in some cases a machine-generated voice will issue a warning. The systems, for example, can alert a driver when a vehicle three or four cars ahead in a line of cars jams on its brakes, and sound a warning to prevent a rear-end collision.

The project, funded with $25 million from the U.S. Department of Transportation, will generate data that regulators will use as they weigh whether future cars should have such “vehicle-to-vehicle” crash avoidance technology as federally-mandated standard equipment.

Safety regulators and automotive technologists are enthusiastic about the potential of vehicle-to-vehicle safety technology, but officials cautioned that they need to know more about how drivers react to the warnings the systems provide.

“Cars talking to each other is the future of motor safety,” U.S. Transportation Secretary Ray LaHood said here at the formal launch of the test. Mr. LaHood said installing automatic collision warning systems in cars could reduce the number of crashes involving sober drivers by as much as 80%.

But until his agency gets more data on how vehicle to vehicle technology works in day-to-day driving with ordinary citizens, Mr. LaHood said regulators won’t start work on new rules requiring such systems.

“Everybody believes this has promise,” he said. “Until we get the data, we won’t know with certainty what promise it really has.”

Efforts to push widespread adoption of vehicle-to-vehicle safety systems could encounter various obstacles, including tight federal and state budgets, consumer resistance to technology that tracks their location, the costs of the hardware and software, and uncertainty about where liability would rest if a system failed to prevent an accident.

The biggest uncertainty with new safety technology is how drivers will respond to warnings—particularly if they come too frequently or are too often false alarms. Recent research by the Insurance Institute for Highway Safety found that lane departure warning systems installed on a growing number of new vehicles have so far had no significant impact in reducing crashes, according to its analysis of crash data.

Eight major auto makers have provided vehicles and engineers to the yearlong Ann Arbor road test, which will be overseen by researchers from the University of Michigan’s Transportation Research Institute.